‘Solution’ to health fund woes labelled discriminatory

A report that recommends charging younger people less than older Australians for private health insurance has been lashed by industry chief.

health insurance

The terms ‘death spiral’ and ‘private health insurance’ are used together with such frequency that they almost warrant a listing in the next update to the Macquarie Dictionary.

We have problem, that is not going away, and it seems the sector itself has one solution – raise premiums every year.

The latest to weigh in with an idea – quickly debunked by the industry as destabilising for older Australians – is public policy think tank, the Grattan Institute. A report, led by health economist Stephen Duckett, recommends partially deregulating premiums to allow insurers to charge younger people less than older people for the same level of coverage.

It says that fewer than 40 per cent of the population will be covered by private health insurance by 2030 unless reforms are made.

“The system faces a death spiral – younger and healthier consumers get a bad deal so they’re dropping their insurance, which means premiums need to rise, so even more young and healthy people drop out, and the cycle continues,” it says.

“This youth exodus means the recent moderation of premium increases is likely to end, and premiums will probably return to increasing at five per cent or more each year. Young people’s premiums have to get cheaper.”

And the response from the sector?

Chief executive of Private Healthcare Australia, Dr Rachel David, says funds are not permitted to discriminate against members based on health status or claims history.

“The latest report from the Grattan Institute highlighted issues of concern in the private health sector previously identified by government and stakeholders, however it failed to offer any workable solutions,” she says.

“While maintaining a system of community rating [which means the same service is available to everyone for the same price] posed challenges for Australia’s health system, it was also one of the features which helped Australia maintain its international reputation for fairness in healthcare.

“Community rating underpins Australia’s private health insurance regulations, and changes to a risk-rated system would severely destabilise premiums for older Australians and threaten the future of fair and equitable healthcare.

“Generational transfer of risk would mean a lot of Australians would have a very uncertain future.”

The chair of the Australian Health Care Reform Alliance, Jennifer Doggett, says the Grattan proposals merely “tweak the numbers” in a bid to attract more young people.

“My biggest criticism is that the paper assumes that the current system of private health insurance is a system worth saving which, in my opinion, is not the case,” says Ms Doggett, a health policy analyst.

“They don’t address many of the fundamental problems with private health insurance: that it is overly complex, cost-inflationary, has high administrative costs, leads to over-servicing, is inequitable, doesn’t help those most in need and disadvantages people in rural areas – although some of these issues are addressed in other Grattan papers.”

In another recent report, the Grattan Institute said private health insurance premiums could be cut by up to 10 per cent if private hospitals were made more efficient and doctor ‘greed’ was contained.

Private health insurance premiums are set to rise again from 1 April 2020, with Health Minister Greg Hunt struggling to keep the increase to three per cent. A jump of 3.2 per cent would be double the current rate of inflation.

Are you just hanging in there with your private cover? Are you concerned that there seems to be no viable alternative to increasing premiums each year?

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    5th Dec 2019
    Make it totally private if people want it - then let the cards lay as they fall... you want - you buy ... but no clog up the public system as you are doing....
    5th Dec 2019
    Our health system is broken with too much public money supporting the private sector. The current government has total commitment to a private ownership and operation ideology so an expectation of a balanced solution to the health system is doomed. Similarly withholding public funds from the private heath insurers is also not going to happen.
    5th Dec 2019
    The government needs to put more money into the private sector so that the public system is not so overloaded.
    5th Dec 2019
    When the 'private' sector take over the queues in the :PUBLIC system - they are clogging up the public system - a public system is a public system - not the playground of the better-off... your medical needs don't go away because you're not working or over-burdened with cash etc (jibe courtesy of Tony Abbott and his wonderful idea to feed fat chicks on $150k with PPL)...
    5th Dec 2019
    You wanna be private ? Go to a private hospital and let your fund pay that...
    5th Dec 2019
    I just spent a week on a public hospital as a private patient as the treatment I needed was not available in the private system. I was transferred from a private hospital to a public one and received a bill of over $400 bring a cost of the ambulance to drive 3 klms from the depot to the private hospital. This bill was covered in full by my health fund. Note if an ambulance has to take you from one public hospital to another public hospital this ambulance fee is not levied.
    5th Dec 2019
    5th Dec 2019
    Our health system is broken with too much public money supporting the private sector. The current government has total commitment to a private ownership and operation ideology so an expectation of a balanced solution to the health system is doomed. Similarly withholding public funds from the private heath insurers is also not going to happen.
    5th Dec 2019
    I think older consumers get a worse deal - having paid big premiums into my fund for over 10 years, then to find I wasn't covered for the cost of my knee replacement. I had to find another $6000 on top of what my health fund would pay, I would have been better off just putting the premiums into a savings account. It is discriminatory, and I would not support the new idea.
    5th Dec 2019
    Patti, try having paid PHI at top level for more than 45 years. I had a high risk hobby when younger, but not once did I ever avail the system for any requirement. Have used it twice since for small procedures, always out of pocket. Only recently dropped extras as totally not worth it now. BUT like most seniors, I will most likely face hip or knee treatment, so reluctantly hang on to my cover. And the only way to get cover for these procedures is to be in top level. Only yesterday saw my Dr and had X-rays. That hobby I loved in my younger days is getting close to catching up with me, but being soley on the pension, any mention of a gap fee - I cannot do it. I am tired of seniors being seen as the pariah of all social, polital and financial woes in this country.
    5th Dec 2019
    Older consumers are discriminated against and saying they should pay higher premiums than the young is ridiculous. Many of us were paying private health insurance long before public hospital care became 'free'. And of course it's not free at all as we pay a levy. Most people don't use their private cover much when they are young and that should be considered when they are older and need more expensive surgery. They have already paid for the privilege. We had private insurance while we were both working full time and trying to pay off a mortgage, educate kids and accumulate a small nest egg. It was our insurance against an injury which might put us off work should we have to wait for months or years for treatment in the public system. We have dropped our insurance since being retired and only have extras cover which we use more now than we ever did for dental, optical, physio and podiatry. Our dental and optical rebates usually cover our annual premium and it only takes one major dental event to make it well worthwhile and a rebate on the occasional physio or podiatry cost is a bonus.
    5th Dec 2019
    Patti - I agree - we have been paying into a Private Health Fund
    for over 45 years - and the main benefits I got was when having our
    children (one being premature) - like you I now find that we are not covered for knee replacements or such nor cataract surgeries.
    That does not seem fair at all.
    pedro the swift
    5th Dec 2019
    So called private "health funds and hospitals" are NOT about health they are about profits.
    Our current socalled "gov' wants to push people into a "health " system like the yanks have.
    Only they extremely well off can afford doctors and hospitals and the rest can go die off. Do some research on the costs of procedures in american hospitals if you want to see how they can bankrupt anyone using them.
    Health care at all levels must be a gov. priority and not a private profit making exercise. Stop wasting money on useless submarines(over 200 Bill. now) and put money into the countries health care system.
    5th Dec 2019
    My husband and I are in our late 70s and have been paying private medical benefits since leaving school. It is becoming a battle to keep paying because Medicare only pays the minimum rebate for the Consultants ($35 on payment of $200. In Tasmania we would have to die before we even got to the top of the list for an appointment in the public system, it is disgusting. Never thought for one moment that this country would end up like it has. We are becoming not much better than a third world country and the way pensioners are treated is very unfair. By the way I had to stay in the workforce in a very demanding position until I was 74 as due to my husband's health I was the only bread winner for 19+ years.
    So I am sick and tired of the young ones criticising the elderly.

    5th Dec 2019
    Another moronic thought bubble from an unbelievable right-wing non-think tank! Report needs to go straight into the Bin or thrown into a bonfire (taking care of Fire Bans)!

    I am surprised to hear there is an "Australian Health Care Reform Alliance" - what the hell have they achieved? While some of their comments above are valid, they have missed the main issues - the GAPS and lack of full coverage (i.e. the Risk being borne by customers, not Insurers), the excessive charges (read Greed) from Doctors and Insurers, and the unrealistic Medicare Rebates from Govts more interested in the Budgets. There is NO need to allow any increases in excess of CPI.
    How come this organisation hasn't pushed hard for a Royal Commission into this broken, profit-driven industry?
    5th Dec 2019
    Bonfire Of The Insanities? Hmm ....
    5th Dec 2019
    I've long said that the totally Unionised doctors union should be brought to heel - along with the nurses, firies and police - all totally Unionised .... and all the better off for it!!

    What? Me? Suggest reducing sacred cows to the same level as everyone else?

    Put 'em all on salary ..... with margins for expertise etc...
    5th Dec 2019
    Let them come in and negotiate one at a time like the peasants are being forced to do... should bring a few to heel...
    5th Dec 2019
    I totally agree with TREBOR .The public purse subsidizes private health premiums, subsidizes private hospital beds (many private hospitals are owned by health insurers so they are rally double dipping)and allows private practitioners to charge what they like leaving patients to pay huge gaps and all to please shareholders. Private hospitals pay nursing staff less than those in the public system and run on fewer staff. Private hospital nurses must phone the off duty specialist regarding concerns with patients with no guarantee they will come in. In the public hospital staffing ratios are better, there are doctors on duty 24/7 and Emergency teams to stabilize deteriorating patients. The standard of care in public hospitals is second to none, but the system is overloaded, and private patients who don't want to pay gaps for private care contribute to that overload. If you are in a critical condition you are taken to a public hospital, regardless of your health cover. The answer is for the government to stop subsidizing the private system. If people want to pay exorbitant health insurance to be treated in hospitals run by health insurance companies with specialists charging exorbitant rates that is their choice. But they should not expect that insurance or care to be subsidized by taxpayers.
    5th Dec 2019
    Older people are already discriminated against by paying higher premiums. And after the last lot of changes, it means that now someone beyond child bearing age must pay for those services if the also want hips and knee replacement covered. Before you could opt out of all pregnancy and fertility procedures. Now you can't unless you take a lower cover and give up on the cover you may want.
    5th Dec 2019
    Catch-a 22 - they get-a you no madda which-a way you go ... they get-a you a-coming and a-going....
    5th Dec 2019
    And everywhere in between. Which illness would you like today Sir?
    5th Dec 2019
    I have it. However I am not sure I can afford to use it!
    So yes, I am definitely thinking of opting out - but of course that is what they want.
    6th Dec 2019
    Maybe if the health insurers stopped making older people fund unnecessary items they could then keep prices down as well.
    IF they had a basic health fund that people could add and subtract what they want to be insured for and paid accordingly it might make a difference.
    6th Dec 2019
    Can I ask some sensible opinions? :)
    I am 61 and always had top cover when younger and working. Now I am not working and on fixed income from our assets. I no longer have any cover at all.
    I am starting to feel the ill effects of my sporty and horsey youth. I have dodgy knees and will probably need knees and hips at some stage. Recent xray says there is moderate arthritic damage already. It is manageable now but wont get any better.
    I was wondering if it is worth my joining a health fund, with hospital cover only, I wont be eligible for ortho stuff for a year but that is fine, I don't need it yet.
    Or do I just continue to rely on medicare, what are waiting times like for knee replacements and do you get the same surgeons? If it helps I am in Bundaberg.
    I had thought to join up and start paying but it looks on reading some of the above that even with hospital cover I could be up for a big bill?
    Other option of course is to sell a kidney and pay to go private when the time comes. What does a couple of knees cost these days?
    Thanks for any advice anyone can give me.
    6th Dec 2019
    Do your sums - To get cover for hips/knees, you need to be in the highest level. And don't forget - If you join now, you will also be hit with a 70% age penalty surcharge. So if monthly premium is normally $200 - you ill have to pay $340 a month. And then when you do have the operation, you could be big dollars out of pocket.
    6th Dec 2019
    Bundabergian, are you assuming you have to do knee replacements? It is not only about money. I heard from a learned Professor researching in this field that knee replacements have a success rate of only 70%, with the rest either continuing to have issues or still having pain, etc. Also, at your age, it is wise to check how long these last - heard 15-20 years (and you can't do it again), but some claim newer prostheses may last longer, I am not sure.

    Alternative is to get into an exercise program without impact on knees both to increase natural knee fluids regeneration (helps cushioning) as well as to increase strength of muscles around it. While waiting for a cure - heard in Israel they are working hard to make Stem Cells work - nothing as of now which actually works. Other claimed cures (partial) are aplenty, but I can't vouch for any - try anything to prolong the decision if you can.
    8th Dec 2019
    Everything is broken!
    9th Dec 2019
    We have been in a health care fund for 40 years. When in hospital , if we have a shortfall it is very little , it is called HBF. But when seeing specialists we have big shortfalls with Medicare. A friend in NSW has had hip and knee operations with very little waiting time , no health cover and never paid a cent. In WA if you are very serious they do it straight away with no cost to you. But if you do not have health cover , for ops like appendix , knee etc you go on a waiting list for up to five years. So you need health care cover. My wife and I have had heart ops , cancer treatment no waiting, the cancer treatment we had to pay 25 % as treatmentment was not in a hospital, but would have been free if at a GVT. hospital. This was day patient for six weeks , everday for radiation. We did this because there was no messing around. They have places where you can stay cheap , subsidized by the GVT. if you are from the country. So no complaints from us but the Prvt. cover is expensive.

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